This story has been updated from a previous version to include comments made by Hologic executives during the company's Q3 earnings call.
NEW YORK – Hologic said after the close of the market Monday that its organic diagnostics revenues, excluding COVID-19 testing, rose 6 percent year over year in the fiscal third quarter due to rising sales of molecular tests for women's health and non-COVID respiratory health indications.
The Marlborough, Massachusetts-based firm reported that its overall revenues rose 3 percent to $1.01 billion during the quarter ended June 29 from $984.4 million in the year-ago quarter, beating Wall Street's consensus estimate of $1.00 billion. Excluding COVID-19 testing revenues, the firm reported that its total revenues rose about 6 percent compared to the prior-year quarter.
Hologic's overall molecular diagnostics revenues rose about 3 percent to $310.7 million from $302.2 million a year earlier on the strength of the firm's Aptima assays for bacterial vaginosis, Candida vaginitis, and Trichomonas vaginalis, as well as its non-COVID respiratory assays. Excluding COVID-19-related revenues, the firm said that its organic molecular diagnostics revenues were up about 11 percent on a constant currency basis.
Hologic President and CEO Steve MacMillan said in a Monday earnings call that the company's molecular diagnostics business has become bigger and stronger than it was prior to the pandemic with an installed base of more than 3,300 Panther instruments and an expanding menu for those analyzers, with rising revenue per Panther as well as greater menu utilization per instrument. The molecular diagnostics side of the company has delivered high-single-digit to double-digit revenue increases in 13 of the last 15 quarters, he said.
Hologic Chief Operating Officer Essex Mitchell said during Monday's call that the firm is in the early days of leveraging its expanded installed base of Panther instruments and has opportunities to increase its share of the molecular testing market, especially for sexually transmitted infections.
Hologic CFO Karleen Oberton added that the firm's molecular business has also had increasing adoption of its multiplex respiratory test for COVID-19, flu A/B, and respiratory syncytial virus, while its Biotheranostics cancer testing subsidiary has been accretive to growth.
Company officials said early this year that the firm has continued to improve its transcription-mediated amplification-based Aptima assays for the Panther instrument, but it has focused its work on developing new tests toward expanding the menu for the PCR-based Panther Fusion add-on modules.
MacMillan said on Monday that Hologic is seeing steady adoption of the Fusion "sidecar" modules and expects that customers will add them to upward of one-third of Panther instruments.
The firm's cytology and perinatal testing revenues declined 4 percent to $122.2 million from $126.8 million in Q3 2023. Blood screening revenues also declined about 26 percent to $7.9 million from $10.7 million. Mitchell noted that Hologic sees opportunities to expand the reach of its cytology business and increase revenues from markets outside the US.
Hologic's breast health revenues, though, jumped 7 percent year over year to $385.0 million from $360.3 million on the strength of the firm's breast imaging business and a smaller contribution from its interventional breast solutions business.
The firm's GYN Surgical business revenues also rose 6 percent to $166.6 million compared to $157.3 million one year earlier, while the firm's skeletal health revenues plummeted almost 30 percent to $19.0 million from $27.1 million year over year.
Hologic also announced last week that it had completed the $310 million acquisition of Endomagnetics, a UK-based developer of breast cancer surgical technologies. The deal brings into Hologic's breast surgery portfolio Endomag's tools for wireless breast surgery location and lymphatic tracing.
Hologic announced the acquisition in April and said at the time that Endomag had reported revenues of $35 million in 2023. The deal was expected to be slightly dilutive to Hologic's non-GAAP EPS in fiscal year 2024 but it is expected to reach breakeven in 2025 and provide accretive earnings in subsequent years.
MacMillan said on Monday that the Endomag deal provides an opportunity to improve interventional breast care as well as demonstrates that Hologic is willing to invest in deals to improve revenues, margins, and EPS accretion. He noted that the firm has also repurchased 10.5 million shares for $750 million so far during the fiscal year and plans to continue deploying capital for M&A and share repurchases.
Hologic booked Q3 net income of $194.5 million, or $.82 per share, compared to a loss of $40.5 million, or a loss of $.16 per share, a year ago. The firm reported adjusted EPS of $1.06, beating analysts' consensus estimate of $1.02.
Hologic also slashed its R&D spending by 12 percent to $64.1 million from $72.6 million one year ago. The firm's SG&A spending was up less than 1 percent at $240.3 million compared to $240.0 million.
The firm ended the quarter with $2.44 billion in cash and cash equivalents.
For the full fiscal year 2024, the company narrowed its revenue guidance and non-GAAP EPS and lowered its GAAP EPS guidance. The firm expects revenues for the year in the range of $4.01 billion to $4.03 billion compared to previous guidance of $4.0 billion to $4.05 billion. GAAP EPS is expected to be in the range of $3.37 to $3.44 compared to previous guidance of $3.45 to $3.55 while non-GAAP EPS is expected to be in the range of $4.04 to $4.11 compared to previous guidance of $4.02 to $4.12.